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Remus2004, Barrister
Category: Property Law
Satisfied Customers: 70109
Experience:  Over 5 years in practice.
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. I am joint owners of a property, and my friend who I own

Customer Question

Hi. I am joint owners of a property, and my friend who I own the property with, 50/50, would like to sell it. I am considering getting a re-mortgage to buy her out and purchase her half of the property. I was wondering if I would have to pay Stamp Duty (again!)
Submitted: 2 years ago.
Category: Property Law
Expert:  Remus2004 replied 2 years ago.
Thank you for your question. My name is ***** ***** I will try to help with this.

Is there a mortgage on the property?

How much?

It might seem an odd question but it is relevant
Customer: replied 2 years ago.

Yes. We originally purchased the property for £215000, with £107500 deposit and £107500 mortgage, which my friend was solely responsible for. I now wish to purchase the property for £255000, so buying out my friend for half of this, with a mortgage.

Expert:  Remus2004 replied 2 years ago.

The situation here is rather odd. However this is the way works in most cases.

You are deemed to have paid stamp duty on half of the property, half each.

If you acquire the property you acquire the other person’s half.

However you don’t pay stamp duty on the acquisition of their half, you pay stamp duty based upon the mortgage. Odd, I know.

If the mortgage which is being discharged is more than £250,000, which is twice the stamp duty limit, then you pay stamp duty on the transfer from 2 names to 1 name.

Unless the mortgage therefore is more than £250,000, there is no stamp duty to pay.

The way the revenue look at it is that you are buying the other person’s interest and as such, you are discharging their liability for the mortgage and half of the mortgage belongs to them therefore if their half of the mortgage is over £125,000, you have to pay stamp duty.

However in your case you say that the mortgage is only one name because your partner is solely responsible although I assume the property is in joint names. That situation is extremely unusual because generally lenders will not allow a property in joint names if only one person is named on the mortgage.

For that reason, because the circumstances are so unusual you are going to have to ask the revenue how they would want this to be dealt with. If we apply the same logic that applies for a mortgage in joint names, there should be none

The definitive answer for this will come from the stamp office

Can I clarify anything for you?

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